One upon a time -- oh, about nine months or so ago -- banking analysts at CLSA labeled Bank of America (NYSE:BAC) stock "the Anti-JPMorgan (NYSE:JPM)," and blasted Bank of America for its weak "core earnings" and "lower-than-expected earnings power." For these reasons and others, CLSA rated Bank of America a sell, and told investors to stay away from it.

But no more. Today, CLSA says Bank of America is a buy.

Who?
CLSA may not be the household name that is Goldman Sachs -- or that the stock analysts at Bank of America Merrill Lynch or JP Morgan are for that matter. But CLSA is no slouch in the stock-picking department. According to our data on Motley Fool CAPS, where we've been tracking its performance for more than three years now, CLSA ranks in the top 20% of rated investors. It's also one of the very few investment banks we track that consistently scores better than 50% for the accuracy of its picks.

In the banking sphere in particular, CLSA has performed above average. A few examples:

Company

 

CLSA Said:

CAPS Says:

CLSA's Picks Beating (Lagging) S&P By:

Morgan Stanley

Outperform

***

35 points

Goldman Sachs

Outperform

***

19 points

PNC Financial

Underperform

****

(21 points)

What's more, according to our own Foolish banking expert, John Maxfield, CLSA is "probably the best-known bank analyst in America." John gives CLSA "respect" for taking on some of the biggest banking CEOs in the nation, and for digging in and asking them the tough, and uncomfortable, questions on earnings calls.

Accordingly, when CLSA says you should buy Bank of America, that's advice worth considering.

What?
So what exactly does CLSA think about Bank of America? According to StreetInsider.com, which reported the upgrade, CLSA is "positive on large US banks" in general, arguing their stocks are priced at "recession prices without a recession." As for Bank of America in particular, the stock sports "relatively clean" book value and a cheap valuation. Additionally, the same factor that had CLSA down on the stock back in April 2015, has the analyst feeling optimistic today: Bank of America's "lousy efficiency," says CLSA, and this creates a "greater chance that BAC could become an event-driven stock."

In other words, any news that suggests Bank of America might turn itself around, has the potential to move the price of a stock that's priced for continued lousy performance, and selling for just 60% of its book value.

Why?
It's hard to argue with that logic. Currently, Bank of America sells for a price-to-book value of just 0.6, versus CLSA's longtime favorite, JPMorgan, which costs more than half-again Bank of America's price -- 0.95 times book.

Granted, viewed from the perspective of P/E, Bank of America looks a bit more expensive than JP Morgan -- 10.5 times earnings versus 9.6. But with most analysts agreeing that Bank of America is likely to outgrow JPMorgan, and post annualized earnings growth of 9.5% over the next five years, to JP Morgan's 7.9%, B of A's higher P/E ratio may be justified.

What now?
All that being said, I do believe there's a third road to consider for investors agreeing with CLSA's broad thesis that "large U.S. banks" are undervalued in general: Citigroup (NYSE:C).

Valued on book value, Citigroup is slightly cheaper than Bank of America at a P/B ratio of 0.58. Citi costs less than Bank of America or JPMorgan when valued on its P/E, which is just 7.6 times trailing earnings. And going forward, the fact that analysts surveyed by Yahoo! Finance have Citi pegged for long-term earnings growth of 33.5% annualized...well, that's a pretty difficult number to believe. But if it's anywhere near correct, it suggests that Citigroup is a better bargain than Bank of America or JP Morgan -- either one.

Oh -- and one more point. According to data from StreetInsider, CLSA rates Citigroup a buy as well. That may be the icing on the cake. If Bank of America is a bargain, then Citigroup must be a steal.

Fool contributor Rich Smith does not own shares of, nor is he short, any company named above. You can find him on Motley Fool CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 249 out of more than 75,000 rated members.

The Motley Fool recommends Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.